Bangladesh - Foreign Governments and Private Donors

Foreign governments and private donors

The United States aid program to independent Bangladesh began even before the United States formally established diplomatic relations with the new nation in April 1972. Large quantities of emergency food aid were sent to help cope with the postwar famine situation. Project assistance through the United States Agency for International Development (AID) began in 1973 with a major program of reconstruction and infrastructure rehabilitation. In the course of time, that emphasis evolved into economic development focused primarily on three broad sectors: improved soil fertility, food security, and increased off-farm employment. By September 1987, United States assistance totaled US$2.8 billion. The United States was the most important donor until the early 1980s when Japanese aid reached similar levels.

Food aid has been a mainstay of the AID program. Through 1987 the United States provided more than 6.5 million tons of wheat, more than 1 million tons of rice, and some 350,000 tons of edible oil. Since 1979 all such aid has been on a grant basis. The Public Law 480 (PL-480) program of food and other agricultural commodity assistance has accounted for half of the dollar value of United States government aid over the years. In the mid-1980s, the PL-480 program ranged from US$85 million to US$110 million per year. In FY 1986, a high year, the United States provided 586,000 tons of wheat, 63,000 tons of rice, almost 25,000 tons of edible oil, and 58,000 bales of cotton. Commercially procured quantities of those commodities by Bangladesh in that period included 1.12 million tons of wheat, 34,000 tons of rice, 146,000 tons of edible oil, and 179,000 bales of raw cotton.

The PL-480 program fit into an overall development strategy to increase agricultural production and provide rural employment. Thus the wheat provided under Title II in the late 1980s was part of food-for-work programs, providing payment to workers who upgraded local footpaths and seasonal roads. The sales proceeds of supplemental PL-480 shipments financed a program of bridge and culvert construction on these food for work roads.

The commodities shipped under the larger PL-480 Title III program in the mid-1980s provided support to domestic food production and ensured that food was available to the most nutritionally disadvantaged population. Local currency generated from sales financed agricultural research, irrigation, and employment--projects essential to the Bangladesh government's goal of national food self-sufficiency--and increased personal incomes, thereby effectively increasing demand for food.

Other than food aid, the dollar value of United States development assistance stabilized between US$75 million and US$85 million annually in the mid-1980s and declined to US$58.5 million for FY 1988, largely because of general pressures on the United States budget for foreign development programs. The long-term trend remained intact, with the cash value of United States assistance about evenly divided between food aid and project assistance.

As the "largest poorest" country, and because its government has been hospitable to foreign assistance, Bangladesh has been chosen by several of the so-called richer smaller countries as a country of concentration for their own efforts. Thus, in addition to the programs of Britain, Japan, and West Germany, significant aid programs were initiated by Canada, Sweden, Finland, the Netherlands, Switzerland, Australia, and others, in which each country concentrated on areas where it possessed special expertise.

In the mid-1980s, a number of these donor countries--calling themselves "the like-minded donors"--jointly studied the trend of development assistance in Bangladesh. They concluded that the quality of life in Bangladesh was declining for the vast rural majority, and they faulted the way the Bangladesh government determined and administered its development priorities and the way the aid donors organized and carried out their own assistance programs. They presented a report to the Bangladesh Aid Group in 1986 suggesting changes in emphasis in favor of greater concentration on programs responsive to the deepest needs of the poor: better health care, better nutrition, greater literacy, a more effective approach to family planning, and greater economic opportunities for poor and landless farmers and for women. Although the analysis and conclusions engendered some controversy, the report influenced the direction of aid efforts by the entire Bangladesh Aid Group, including the most important donor and the group's founder, the World Bank.

Economic assistance has come to Bangladesh through the Soviet Union and East European countries and through oil-producing members of the Organization of the Islamic Conference. Much of the aid from these donors has taken the form of construction, equipment, and training. Moscow committed US$132 million for aid to Bangladesh immediately after independence, but disbursement proved to be very slow. In subsequent years, the Soviets figured prominently in power generation, and as of the end of 1987 the Soviet Union appeared to have agreed to extend more aid for power generation, transmission, and distribution and also for oil exploration.

Although relatively modest in monetary terms, the assistance of private voluntary organizations from the United States and elsewhere has also been important. They have offered assistance on a grant basis in fields where return-on-investment criteria cannot be applied, such as emergency relief, medical services, and basic education. In addition, because of their modest scale and insulation from international politics, these organizations can sometimes venture into activities with a high degree of social experimentation, sometimes producing models to be replicated on a larger scale by official development assistance. Aside from such well-known secular organizations as the International Red Cross and CARE, most of the private voluntary organizations had religious affiliations.